US govt shutdown fight could morph into debt limit superstorm

US govt shutdown fight could morph into debt limit superstorm

WASHINGTON - With the US government shutdown in its second day on Wednesday and no end in sight, a worrisome reality is sinking in on Capitol Hill: The standoff is merging with a much more complex fight in mid-October over raising the federal debt limit.

"We think the issues are converging," Republican Representative Paul Ryan, chairman of the House Budget Committee, told reporters on Wednesday.

Ryan, last year's Republican vice presidential candidate, sees the development as positive, forcing two deadlocked adversaries to come to the negotiating table in the face of a bigger threat than a partially shut-down government

But it could mean the shutdown will not end until the middle of October.

More significantly, the result could be a dangerous and unpredictable fiscal superstorm that may be harder to resolve than the shutdown alone or the 2011 debt limit struggle that sent financial markets plummeting and brought the United States to the brink of default.

The central problem is that congressional Republicans view the debt ceiling as their best chance to negotiate concessions from President Barack Obama, while at the same time, Obama says he will not negotiate around the debt ceiling, as he did in 2011.

That alone is a recipe for stalemate.

The time frame is equally daunting. The government's $16.7 trillion borrowing cap must be raised by October 17.

Finally, Republicans aim to bring new demands to negotiations that already have deadlocked over Republican efforts to derail or curtail Obama's signature healthcare law, known as Obamacare.

Beyond Obamacare, Republicans have talked about seeking concessions on tax reform, approval of the Canada-to-Texas Keystone XL oil pipeline, a reduction in "sequester" spending cuts on the military along with a long wish list of other Republican priorities.

"I think there will be an even bigger list when it comes to the debt ceiling," said Representative John Fleming, a Louisiana Republican. "We're going to be talking about the Keystone XL pipeline, movement of cuts into entitlement reforms, beginning to adjust sequester," and more.

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